What is The Corporate Transparency Act? And why you need to pay attention.
In 2021, Congress passed the Corporate Transparency Act. This law creates new beneficial ownership information reporting requirements as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures. Although the intent of the law was to combat money laundering, tax fraud and other illicit activities, in practice the majority of our clients will experience another reporting requirement to keep track of and potential for large fees for non-compliance.
Entities required to report are broken down into two categories.
Domestic reporting companies: Corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.
Foreign reporting companies: Entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office.
There are 23 types of entities that are exempt from the reporting requirements. See here for the exempt entity types, but unless there are some rare circumstances, dental practices and real estate holding companies are not exempt from these reporting requirements. Certain types of trusts will also be required to report.
Important Dates
Business owners with registered entities created to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.
A reporting company created or registered on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the company’s creation or registration to file its initial BOI report. This 90-calendar day deadline runs from the time the company receives actual notice that its creation or registration is effective, or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.
Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.
If you do not have a local CPA or Attorney completing this on your behalf and you do not want to try and tackle this on your own, please reach out so we can perform the reporting process on your behalf as a separate engagement.
Matt and Wendy have recorded a quick video to break down this new regulation for you. Please visit our You Tube page to learn more.
Paladini Financial - You Tube - Corporate Transparency Act
As always, feel free to reach out with any additional questions you may have. For more information pertaining to the reporting process and to read the regulations for yourself, please see visit here.
